Internal Market in Services (EUC Report)

Lord Woolmer of Leeds: rose to move, That this House takes note of the Report of the European Union Committee on Completing the Internal Market in Services (6th Report, HL Paper 23).

Lord Woolmer of Leeds: My Lords, first, I must extend my thanks to all those who gave oral and written evidence to Sub-Committee B, to our Clerk, Anna Murphy, to our adviser, Professor Mike Waterson and to the members of the Sub-Committee for the enormous amount of time and careful reflection they gave to this important inquiry. Last, but not least, I thank the Minister of State for Trade and Investment and Foreign Affairs at the DTI for the written and oral evidence that we received and for the positive and helpful government response to our report.
	Our report concerns the proposed EU directive on services and the internal market, published in early 2004. There appeared at the time to be broad agreement that more vigorous moves were needed to ensure that and internal market in services really works within the Union. Yet, there has been considerable controversy over the proposal, which has been especially marked in France and Germany—and in the European Parliament. The European Union constitution referendum campaign in France, as noble Lords will recall, notably featured alleged threats to the French economy and interests posed by Polish plumbers.
	The European Parliament itself has come near to deadlock on the issue. Its single market committee failed last week to make progress on some 1,500 amendments to the draft and will try again on 22 and 23 November. The Parliament now hopes to have its First Reading debate and vote in January next year, two years after the draft was published. It would be helpful to hear from my noble friend the Minister what progress is being made in the European Council on the directive and what he now expects to achieve, if anything, under the UK presidency.
	Given that background, noble Lords will understand that we approached our inquiry with care and sensitivity, aware that feelings run deep on some elements of the proposal. Nevertheless, members of your Lordships' committee felt that they should come to firm judgments and conclusions and I was pleased that the committee was unanimous in approving its report.
	Services cover a wide variety of constantly changing activities. Paragraph 21 of the report gives a range of concrete examples. Crucially, services are purchased by businesses, as well as by individual consumers. But despite the dominance of services in the EU economies, they account for only 20 per cent of intra-EU trade. Although the treaty sets out the central principles of the single market, including the right of establishment and the right to provide services within the Union, a single market in services is much less developed and has greater obstacles at member state level than that in manufactured goods.
	The Commission has, therefore, proposed the directive to provide a framework that will eliminate obstacles to the freedom for service providers to establish their businesses in any member state and the free movement of services between member states. It seeks to give both providers and recipients of services the legal certainty that they need to exercise those two fundamental freedoms established in the treaty.
	Your Lordships' report concentrates on the free movement of services between member states as we judged—rightly, as it turns out—that this raised the most disagreement. It does not mean of course that we believe that the freedom of establishment is unimportant.
	The principle of free movement of services has been clarified and developed over time through case law of the European Court of Justice. In paragraph 186 of our report, we say that nothing should be done through this directive, as eventually amended and agreed, that diminishes the existing legal freedom to provide services. The aim should be to simplify and strengthen that freedom and not to reduce it.
	The draft directive proposes different rules of the game for the temporary provision of services, and it is those that raise most controversy. The committee spent some time seeking to clarify the distinction between providing a service in another member state by becoming established there and providing a service on a non-established or temporary basis. It is the latter that concerns the freedom to provide services and is of particular interest to small and medium-sized enterprises which want to explore entry into new markets without the full costs of first becoming established in each potential market.
	Chapter 3 of our report discusses the distinction. We agree that there is some uncertainty in the meaning and practical application of the temporary provision of a service, and we note that both supporters and opponents of the draft directive suggest the need for more certainty. We concluded, however, that there is a fine balance to strike in this, as attempts to define "temporary" service provision could lead to a more restrictive interpretation than is currently supported by European Court of Justice case law.
	The draft directive proposes a horizontal approach covering all services unless specifically exempted rather than a vertical, detailed service-by-service directive. Many critics of the proposal argued that the vertical service-by-service approach harmonising rules for individual services was needed because every service differs. We discuss the issues in Chapter 4 of our report. We conclude in paragraph 75 that the Commission's approach is right and that there is a danger that sector-by-sector harmonisation of regulations would become bogged down for many years.
	I turn now to the matter that has caused most controversy—the country of origin principle. Chapter 5 of our report introduces this, and Chapters 6, 7 and 8 consider important related details. The country of origin is the member state in which a business is originally based as its "home" country. A business might also provide services in another member state and this is referred to as the "host" country. A business that operates in a host country on an established basis must do so in conformity with the regulations of the host country.
	As paragraphs 76 and 77 of our report explain, the draft directive proposes that a business seeking to offer its services in a host country on a temporary basis under the "freedom to provide services" should be able to do so,
	"subject only to the national provisions of their Member State of origin which fall within the co-ordinated field".
	That is really quite important. The latter means,
	"provisions relating to access to and the exercise of a service activity, in particular those requirements governing the behaviour of the provider, the quality or content of service, advertising, contracts and the provider's liability".
	The CBI saw the country of origin principle as a "core component" of the draft directive, and that failure to achieve agreement on it would be,
	"a lack of confidence by Member States . . . in the fundamental rationale of the European Union, namely that of trust between Member States fostering economic and social progress".
	However, opponents of the draft directive effectively reject the country of origin principle. The main concerns that they raise explicitly are perceived threats that this brings to health and safety and environmental standards, employee rights and consumer protection. There may also be unspoken concerns regarding wage levels, labour agreements and threats to established businesses and practices.
	Those concerns are summed up in the allegation that the country of origin principle would encourage a "race to the bottom" or alternatively that the principle poses a threat to the European social model. Chapters 5, 6 and 7 set out the different viewpoints and our conclusion on these issues.
	There is no doubting the strength of feeling among opponents and proponents of the country of origin principle. At a time of modest or weak economic performance, high unemployment in some member states, especially France and Germany and the accession of 10 new member states from eastern Europe with generally lower wages and costs, it is understandable that organised labour, left of centre politicians and businesses which fear competition, might find common cause against the drive for greater market flexibility. Equally, it is understandable that the 10 new member states should feel aggrieved that, having entered into Europe by abiding by the various requirements of the acquis, their businesses might then be denied free access to the service markets of the wealthiest states. The debate on the services directive has resulted in some substantial tensions within Europe.
	We listened to and considered the different views and viewpoints with great care during our inquiry and in our discussions leading up to our report.
	In summary, we were not convinced that health and safety should be exempt from the country of origin principle as even temporary service suppliers must meet the agreed standards in the acquis. I note that the government response to our report says that a top negotiating priority for the Government is to ensure that UK standards of health and safety are upheld in all circumstances, but that they wish to ensure that any drafting changes are limited to those strictly necessary. Can the Minister tell your Lordships what specific areas of health and safety cause him concern under the country of origin principle?
	We are also not convinced that the draft directive threatens employee rights, public healthcare or consumer rights. There are specific derogations included in the draft directive which address those concerns. We do not agree that there will be "a race to the bottom".
	The proposed application of the country of origin principle is accompanied by proposals for measures to improve consumer confidence when buying services from providers operating on that basis; that is, on home country regulations within the co-ordinated field. Of course no one is forced to buy services from businesses and reputation and consumer choice will always be, and should be, a powerful force in the marketplace. But the draft directive proposes confidence-building measures to reduce consumer concerns and increase trust. These measures include voluntary codes to ensure the quality of service provision. They also propose the establishment of mutual assistance between member states on the operations and standing of businesses established within their borders.
	In our report, we were doubtful that the changes needed in the UK to make this system work had been fully grasped and we felt that greater attention needed to be given to this. The Government's response to the report informs us that they have commissioned a study of implementation costs associated with the mutual assistance provisions but that the costs of such a system are likely to be significant. Can the Minister tell your Lordships who is conducting this study; which stakeholders are being consulted; and when the study is expected to report?
	I turn finally to the scope of the draft directive, the second major area of contention. A number of services are already exempt from much of the draft directive because they are already covered by other service-specific directives, as explained in paragraph 11 of our report—financial services is but one example. The disagreements about scope now centre on the extent to which services of general interest should be covered by the directive. These are essentially public services of various kinds where strong non-market and public policy considerations exist. What falls under this designation differs from country to country and we agree that this is a matter for each member state to decide.
	The problem arises with those services of general interest where the end user receives the service free, or substantially free, of charge but the service itself in whole or in part is delivered by the private sector for remuneration by the public authorities. These are so-called services of general economic interest as opposed to services of general non-economic interest which are exempt. In paragraphs 22 to 28 of our report we discuss that point, which is a very important point in the discussions in Europe. Moves in the European Parliament to exempt all services of general interest are a key divisive issue there.
	We conclude in our report that services of general economic interest should be included in the directive, so that provision of such services on behalf of public authorities is transparent and open to the widest competition by service suppliers from throughout the European Union unless there are overriding and justifiable reasons of national interest.
	The Government's response to our report says that certain public services are not suited to be covered by the directive; for example, public-funded health services, for which they are seeking exclusion from the directive. Will the Minister tell your Lordships what the principle is behind that stance? How then do the Government intend to resist the blanket exclusion of services of general economic interest?
	The draft services directive is an important proposal that some see as a touchstone of how the European Union responds to the challenges of the Lisbon Agenda and market flexibility, and, more widely, to global competition. I hope that I have indicated some of the issues your Lordships may wish to address today, and I look forward to the debate to come. I beg to move.
	Moved, That this House takes note of the Report of the European Union Committee on Completing the Internal Market in Services (6th Report, HL Paper 23).—(Lord Woolmer of Leeds.)

Lord Inglewood: My Lords, on previous occasions in your Lordships' House I have explained that, in my view, the real point of the European Union is not money and budgetary aspects, but the establishment of a system of rules put in place to integrate the economies of Europe in order to improve our collective standard of living, and to enable us to compete with the threats and opportunities of globalisation. This excellent report, which I warmly endorse, is a good example of how important that aspect is, and equally of how a failure to get it right could be so damaging to Britain and its citizens, the other member states and their citizens, and the European Union as a whole.
	Between 1999 and 2004 I was a member of the Legal Affairs and Internal Market Committee of the European Parliament. I am tempted to say that this was good fortune, because that is practice and good manners. However, having heard so many of the arguments put forward in the debate about the services directive, I sometimes wonder whether it was good fortune to have sat through it all. I say that because it was a depressing experience. Despite the fact that, in the words of the recently published OECD 2005 survey of the Euro area, in the section on integrating services markets,
	"With its very wide scope, the services directive can be expected to bring about large employment and welfare gains",
	the amount of criticism that was directed at this measure—which, on the face of it, can be almost entirely beneficial—was depressing. Of course elected representatives are there to articulate constituents' points of view, but the procession of special pleading was imaginative, wide-ranging and ingenious, always advancing reasons why the impact of the directive should be watered down.
	Again, as the OECD document has pointed out:
	"Despite its anticipated benefits, the services directive has met heavy opposition from different parties, in particular the labour unions. Its transversal approach implies eliminating rents in many sectors, including the regulated professions, thereby making it advantageous for a variety of powerful special interests to coalesce against the proposal".
	The consequence of this in the European Parliament was touched on by the noble Lord, Lord Woolmer, in his opening remarks. From what my ex-colleagues there tell me, it is possible that a majority will emerge for a form of words that ought to make the directive at least moderately acceptable. I hope this will also run with the likely political agreement that is emerging in the Council, but I will be interested to hear from the Minister whether that is the case.
	It is hardly very perceptive to point out that our economies have to adapt or Europe will die. It is as obvious as saying to a farmer, which I am, that agricultural support has got to change. If one is faced with that, it is a painful process, but it has simply got to be done, and those involved have to take it on the chin.
	As has been pointed out, there has been a considerable amount of misinformation about the impact of this directive. Again I shall quote the OECD:
	"In addition, misunderstanding about the interaction of the proposed services directive with the existing Posting of Workers Directive and scepticism regarding the possibility of enforcing this directive has fuelled excessive fears of social dumping, while others have argued that services, such as health care should be excluded. In public comments the country-of-origin principle has been misinterpreted and the directive has been linked with the issue of movement of persons from the new to the old EU member countries. Skilful use of this misunderstanding has enabled interest groups to create considerable resentment in public opinion against the proposed directive".
	The world cannot remain as it is; nobody wants it to. We must deal with the changes as the world evolves. As I have already explained, there are concerns for employees, but we must also remember the concerns of the next generation of workers and employees. No amount of university expansion, training or sponsored schemes will avail anything if there is not a lively market for labour when people are ready to go into the labour market. The mythical Polish plumber, and his real predecessor in London, the Irish plumber, filled a need; that, after all, is why they came: there was a job that needed to be done. Flexible labour practices are a priority in the face of increased competition from outside and enlarged opportunities abroad. Competition is the hallmark of the market and competitiveness in delivery is the touchstone of success within it.
	As Anatole Kaletsky pointed out in yesterday's Times, failure threatens over a period to dismantle our economies, reducing them, and with it our countries, to also-rans in the global marketplace. What will that do for jobs or services? Equally, it is no good fantasising about unilaterally jettisoning the European Union, because you cannot unilaterally withdraw from interdependence; it is too late for that now. The Union must be changed, but it will not evaporate at the same time. It is a false dichotomy to see an alternative between the European Union and market economics. There is no real choice; it must be both. That is the challenge, and the report points the way and shows what a political test the future holds for us. In truth, in my view, it will be incredibly hard work, but we must grind on doggedly and persistently, because there is no alternative worth having.

Lord St John of Bletso: My Lords, I join in thanking the noble Lord, Lord Woolmer, for his able chairmanship of this fascinating inquiry. I also appreciated the guidance of our specialist adviser, Professor Michael Watterson.
	As we know, the directive was prompted by the EU's heads of state in Lisbon, in March 2000, to make Europe,
	"the world's most competitive and dynamic economy".
	My understanding is that the services sector accounts for 70 per cent of Europe's GDP but only 20 per cent of intra-EU exchanges.
	A study published in January by Copenhagen Economics, a consultancy company, suggests that the directive could create up to 600,000 jobs and raise foreign investment in the services sector by up to 34 per cent, and that the UK would be a significant beneficiary. As we know, Europe's single market was supposed to come into effect in January 1993, providing freedom of movement not just in goods but also in capital, people and services. The major impediment to freedom of movement in services is without doubt the fact that numerous sectors still hide behind national interests.
	As paragraph 180 of our report mentions, the draft directive comes under discussion at a time when the benefits of a single market have been overshadowed by relatively high levels of unemployment in some member states, and the additional pressure for economic restructuring with European enlargement. We have been given many examples of how the directive would work in practice, from the Polish plumber to florists, accountants, architects and lawyers, but my main interest is the benefit the directive would give to small and medium-sized enterprises.
	In its evidence, the DTI drew reference to the Commission's 2002 report, entitled, The State of the Internal Markets for Services, which identified 91 different barriers to trade in services. Among the more important barriers were the often-complicated and lengthy licensing and authorisation procedures that businesses seeking to provide services in other member states are obliged to complete. Those procedures often require multiple visits to the member states with no guarantee of a positive outcome.
	Another problem is the heterogeneity of regulation when different countries have slightly different procedures but all meet the same objective. The resulting costs often deter small businesses from trading across borders or establishing themselves in other member states. Certainly, the DTI believed that those barriers could be overcome only by the removal of disproportionate and discriminatory legislation. The services directive would provide a legal framework to eliminate obstacles for companies and individuals to establish their businesses in other member states and would certainly allow freer movement of services. I agree with the noble Lord, Lord Woolmer, that many arguments raised against the direct directive are based on misunderstanding and seek to obstruct change and the effective operation of the free movement of services in the EU.
	Synonymous with the draft directive is the ongoing debate on the country-of-origin principle, where opponents of the directive, including the trade unions, say that it is an open invitation to social dumping in which competition from poorer EU countries would drive down wages and welfare standards in countries such as France and Germany. My understanding is that many of those concerns have been catered for in the Bolkestein directive and that "posted workers" would have to obey local social and labour legislation wherever they are working. It would be illegal to undercut a host country's minimum wage or health and safety standards.

Lord Lea of Crondall: My Lords, I am most grateful to my noble friend for giving way, but that is not quite what the trade unions are saying. They say that there are many areas where there are no collective agreements and that they would support the directive if it was accompanied by making progress on the temporary agency workers directive, which will cover many millions of people in the future. It is rather similar to the gangmasters Bill type of area. I hope that that will help to clarify why there is some trade union opposition.

Lord St John of Bletso: My Lords, I certainly take that point, which was made very strongly by the trade unions. But the general principle and thrust of what we understood from the trade unions was that they would prefer the position to remain as it is and would like more allowances which would not necessarily go in the format of the directive.
	I could ramble on on health and safety issues, social dumping, consumer protection and services of general interest, but simply want to refer to the last sentence of paragraph 206 which aptly summarises my views. It says:
	"If the draft Services Directive is to have an impact, it is necessary that greater attention is paid to these important issues of confidence-building".
	I recall the wizened words of Sir John Harvey-Jones, past chairman of ICI, when he said that all change is risky, but the greatest risk is no change. This draft directive is all about unfinished business and needs our full support.

Lord Giddens: My Lords, I normally do not like to agree with what everyone else is saying, but in this case I have to. I congratulate the members of the committee on their excellent report, which is incisive, rigorous and well argued. Noble Lords would expect me to say that because I agree with almost everything in the report. I should like to single out a number of points and elaborate on them.
	First, the creation of an effective, competitive market in services is crucial for the future of Europe's economies. It is also crucial for the now stalled Lisbon process. Looking at the occupational statistics for Europe and the other industrial countries, the changes that have taken place over the past 20 years are truly amazing. The proportion of the workforce in the EU fifteen working in manufacturing today is only 15 per cent. According to the latest statistics for this country, it is only 12 per cent, while extraordinarily in the United States, the proportion is now down to 10 per cent. Moreover, those proportions will almost certainly fall further. This means that all net new jobs have to be created in the diversity of service industries. It also means that we must make these industries competitive. A recent OECD report already referred to looks at the future of the industrial societies in general and includes information on the EU countries. It makes the point that every industrial country must become much more competitive in the area of services. One way to do this that is stressed by the OECD—but not so much in the report—is by the introduction of far greater penetration of ICT into certain kinds of service delivery.
	Secondly, the report is completely correct to stress the urgency of this issue. On page 45 it states that the EU must be "bold". The EU is not always known for its boldness and that must include the European Commission, which actually has been bold on this issue. It also has to include the national leaders of Europe who, if I may say so, have been far less bold in promoting it. I am sure that all noble Lords will have read the report of the group chaired by Andre Sapir on the economic future of Europe. The report and Andre Sapir's subsequent writings argue cogently that completion of the single market is the most important factor that can lever better performance in the European economies.
	To this we have to add the issue of outsourcing, a matter not discussed in detail in the report. But whatever happens with the notorious services directive, international outsourcing will advance. Even the most conservative reports on international outsourcing take that view. It goes far beyond call centres; it can and will affect financial, legal and medical services. For example, hospitals in the United States already send X-rays to India for interpretation overnight or over the weekend. The doctor can then make a diagnosis either the next day or on the Monday, having been off work. Similarly, even the most conservative study on the future of outsourcing, one produced by McKinsey, argues that 4 per cent of all jobs in the EU fifteen will be lost by 2012. This means that Europe must gear up for more efficiency in the vast area of services, an area which now constitutes essentially what our economy is all about.
	Thirdly, the report is quite right on the principle of the country of origin, which is really the most notorious part of the services directive. The country of origin principle covers the temporary element. Progress has been made because all these issues have been discussed intensively over the past two years; that is, before this report was produced. Of course we have to define clearly what "temporary" means in this situation, but as other speakers have said, the country of origin principle will not produce a race to the bottom. Looked at what happened after the first debate on the expansion of globalisation. Many thought that that would produce a race to the bottom in European countries because we are not just competing internally, we are competing with countries which have far lower wage rates. Did it produce a race to the bottom? No, it did not. It produced net benefits both for poorer societies and for the industrial countries.
	The same can be expected to happen in the EU. I invite noble Lords to look at recent studies of the impact of eastern Europe and the famous Polish plumber. It shows that much of what was said about that, and which was then believed by the citizenry, was simply false. It is worth bearing in mind a study by Katinka Barysch of the Centre for European Reform. Her report shows that what are now called the central European countries, those which used to be referred to as the "eastern European countries", have been integrated with the EU fifteen for about 15 years, since the fall of the Berlin Wall. Over that time all these economies have enjoyed a net benefit. For example, in the EU economies over the 1990s there was a net benefit of something like 115,000 jobs, not job losses, because of economic integration. So fears of a race to the bottom are certainly, in my view, misplaced.
	The fourth issue is the issue of public services, which is very important. Many of the people who have been in favour of the services directive have felt uneasy about this; for example, in areas such as medical services, as has been mentioned. On the other hand, however, as the report states, the European Commission has done much to meet these objections—each country can define what counts as its public services—and so it is quite right for the report to argue that maybe it has gone slightly too far because, where public services are provided by outsourced financial competition, they surely should be subject to the same regulation as other service industries.
	All this having been said, we should ask why the services directive has produced such an emotional response across Europe. "Services directive"—what a banal European-style term. Why should it provoke so much passion across Europe? You would not know from the slightly dry-as-dust report that it has provoked so much passion. But it has, and it continues to do so. I downloaded yesterday something off the Internet in which someone described it as the "services directive from hell", the worst thing that has been visited on the European Union over recent years.
	Why should this be? There is a reason. It is very important to understand the backdrop and I feel that the report lacks an attempt to tease out the implications. The backdrop is essentially the structural development of the EU over the past few years, driven by the Commission, in two areas—first, the single currency, and, secondly, the single market. These are areas over which the European Commission has a great deal of "competence", to put it in Euro jargon.
	But the welfare systems—the systems of social protection—have not been driven forward. These issues are not covered within the remit of the EC and the Commission itself does not have much power in this area. So many of the criticisms come from the supposition that what is happening in Europe—because of the position of the single currency and the single market—is essentially a marketisation of European society. That is why people are so worried about the European social model.
	The report contains about half a page on the European social model—it should have more—and it states, seemingly based on an odd remark by the Minister for Europe, that the European social model is so vague a notion that there is not much point in using it. This is completely false. The European social model is a shorthand term for the advanced systems of welfare which the most developed countries in Europe have established and which provide for not only a market-based society but a society which offers social protection for its citizens; which protects them against a large number of risks, including health risks; and which centrally tries to reduce the inequalities that a purely market-driven society would have. We saw what happened—if the Benches opposite will forgive me—during the Thatcherite period where market-driven policies produced a radical increase in economic inequalities. The European social model must be defended. But how can it be defended by people who, like me, support the services directive? This is one of the central questions for Europe.
	In conclusion, although some people say the services directive is undercutting the European model, I would argue forcefully the opposite. You cannot defend and preserve the European social model if you do not introduce these provisions. To show why, look at the best performing countries in Europe. They include, to some extent, the United Kingdom, but primarily they are the Scandinavian countries—Denmark, Sweden and Finland—together with Ireland and one or two others. What have these countries done? They have opened themselves out to the market. But have they undercut social protection? No. These have been the most reformist countries in Europe, especially the Scandinavian countries.
	We want a society in Europe which combines competitiveness in the global economy with social protection. We know it can be done—and that is the kind of model we should push for.

Baroness Cohen of Pimlico: My Lords, I too, congratulate my chairman, my noble friend Lord Woolmer of Leeds, on his leadership in this inquiry. As the debate has already shown, we found it was an extraordinarily difficult subject to get hold of, and even more difficult to keep any clarity of view. We—and, indeed, many of the witnesses who came to help us—all struggled with it.
	The reactions displayed by many of our European Union colleagues and important sections of UK opinion, such as the Trades Union Congress, ranged from dismay to open vilification. There was a time, in about May this year, when it was tempting to conclude that the whole subject was too difficult and that as the directive was going to run straight into the sands and be voted down in the European Parliament anyway, we might as well give up trying to inquire into it. My noble friend Lord Woolmer, with his customary intellectual persistence, kept the heid, as my Scots family say, kept focus and kept us all concentrating to reach our conclusions.
	The genesis of this directive lies in the undoubted fact that while European Union members agreed from the beginning to create a free market in goods and services, there remain, more than 50 years after the Treaty of Rome, substantial barriers to cross-border trade and services. Goods are, with minor exceptions, freely traded, greatly to our mutual benefit, but not services. Every attempt to liberalise services has been hard fought, bitterly resented and partial in its results. I speak as one who both observed and assisted as a participant in the battle to arrive at something that looks like a financial services action plan—painfully arrived at, and by no means yet executed.
	Liberalisation of railway services, also the subject of an earlier report by the sub-committee, has been almost as painful to agree, and as partial in its execution. Our committee was also not convinced, in the context of last year's inquiry into liberalisation of gas markets and security of supply, that liberalisation of energy supplies was sufficiently accepted by member states to make its execution a matter on which realistic planning could be based.
	Progress in opening up an internal market in services has generally been so slow as at times to be almost imperceptible, in sharp contrast to the development of an internal market for goods. It is against that background that the commission produced a comprehensive directive that sought to make rapid progress on all fronts, rather than continuing to legislate slowly on a sector-by-sector basis, and our report ended up in total agreement. The interesting thing was that all member states had agreed to create an internal market in services; it just did not seem to be happening on a universal basis.
	Indeed, as our report observes, the directive itself is otiose. As witnesses from the legal firm Clifford Chance told us, all the measures in this directive already exist in European Union law, and it adds nothing new by way of legal rights and duties. Essentially, it simply says that this is what member states agreed and now we have to do it.
	I felt an eerie sense of familiarity with experience much earlier in my career trying to persuade the government of the day that a law on domestic violence was needed. Opponents argued, correctly, that assault on women—or men—had always been a crime and that any further legislation in this area was unnecessary and confusing. Practitioners in the field, as I then was, knew, however, that cases against perpetrators were seldom brought and even more rarely successfully prosecuted. In the end, legislation was introduced whose purpose was, essentially, to assure the assaulters and the police who were charged with arresting and prosecuting them that assault really, really was a crime and really, really must be prosecuted.
	There is an analogy with services in the EU. All agreed many years ago that barriers must not be placed in the way of cross-border trade and services, but many member states and key national institutions seem to be having great difficulties in accepting the provisions of a directive that provides for dismantling these barriers. The UK Government advocate liberalisation and are in the lead in pressing for the directive to be implemented, but we are trying to exempt health services from its operation and we have not yet convinced the Trades Union Congress of the case for it, and our four largest trade unions oppose much of the directive. As our report observes, some founder members of the European Union see it as an attack on their entire social policy framework.
	Under the patient and rigorous leadership of our chairman, the sub-committee teased out the principal objections to the directive and was able to arrive at the conclusion that they were unfounded. The most controversial principle, which provides that firms seeking to provide services outside their home state can do so on a temporary basis, operating under the legislation of their country of origin, could not really be said to threaten security of employment, as trade unions in the UK and other member states believe, much less threaten the fabric of social provision established in the older member states. Professional standards in key areas are already assured by another directive on professional qualifications. The Posting of Workers Directive, which was agreed 10 years ago in 1996, means that any foreign worker in the European Union is bound by the employment laws where the work is carried out, even if the employment laws in his or her own country are less stringent. Nor will the directive relax hard fought for health and safety standards since EU-wide legislation covers these matters already.
	This is all very puzzling because, in terms of consumer protection, we had accepted for years that goods made in some European Union countries may be produced to standards below, or different from, standards of consumers in the country to which they are exported. We could find no compelling reasons why consumers could not accept services on this basis. The German hairdresser, who, along with the Polish plumber, haunted all these discussions, provides a useful example. In Germany, hairdressers are required to serve a substantial apprenticeship before they may set up in business as a Friseur. Under the directive, it would be possible for a British hairdresser, who has not served such an apprenticeship, because that is not British practice, to set up on a temporary basis in Germany. German consumers might not know that the British hairdresser was not trained in the same way as their own and could find themselves with a bad haircut or, more worryingly, injury from a poorly executed colouring job. But the temporarily established British hairdresser is subject to the same health and safety regime as his German counterpart while he is in Germany, and if he is merely incompetent rather than dangerous, surely he would be avoided by German consumers on the basis that one does not go back to a person who did a bad haircut. Opposition in this case can be based only on the fear that under-trained British hairdressers, or hairdressers from anywhere else in the European Union, would undercut German prices.
	But German residents buy goods made in European Union countries where German manufacturing standards are not adhered to and welcome the choice opened up to them. German manufacturing jobs were very probably lost in the past because these goods were being manufactured in other parts of the European Union, but the German consumer, and indeed all of us, accepted this loss in the belief, fully justified by events, that the benefits of a larger market would be greater than the temporary disadvantages to some workers. Members of British trade unions buy textiles manufactured in other parts of the European Union, having accepted some time ago the consequential disappearance of own textile industry.
	Our report fairly concludes that, in logic, the fears expressed to us lack foundation and have been exaggerated for political reasons and that, in particular, the argument advanced by some member states that the directive is designed to threaten society as they know it cannot be substantiated. However, the worries persist, and anxieties are being expressed by groups that are neither fools nor Luddites, and it must be important to understand the root causes of these concerns given that they cannot altogether be found in logic. My noble friend Lord Giddens has suggested one set of causes, but it has always seemed to me that the most threatening thing about the market for services is that it is so large and so important that any change in its structure must generate winners and losers—there is no change without generating winners and losers.
	The market was always large, but given the decline in manufacturing as the low-wage economies of the world take over, and the demands of an increasingly well off population, it has now developed in the European Union countries to the point where services make up 54 per cent of gross domestic product.

Lord Giddens: My Lords, decline in manufacture is mostly the result of technology, not the transfer to poorer countries.

Baroness Cohen of Pimlico: My Lords, I am grateful to my noble friend. At all events, services have become much more important than the trade in goods and employ more people, which is a very different position from when the Treaty of Rome was signed. Since cross-border trade in services amounts only to 20 per cent of intra-European Union trade, it is natural that some anxieties should be felt widely about the consequences of opening up the balance to competition. I well remember, as will many noble Lords, the anxieties expressed by some parts of British industry in 1973 about joining the European Union. Indeed, some of their specific worries were absolutely justified; some businesses vanished, but others took their place. I remember, too, quite how dismissive some of our European Union colleagues were about these worries, and we should be careful not to dismiss realistic anxieties out of hand but explore them painstakingly, as our report did.
	At a philosophical level, I suggest that there is a difference between the provision of goods and the provision of services, which may also account for some of the opposition to some of the liberalisation to which we have all in principle assented. To take the consumer's view, if you find that you have bought an unsatisfactory product, manufactured in the European Union but outside your own state, you will usually be able to get compensation or a new one in a fairly straightforward way. The defective kettle springs to mind. If you have bought a defective service, a bad haircut, a poorly executed plumbing job, redress is not straightforward even if the perpetrators are in the same state, and not at all straightforward if they are in the area on a temporary basis. A United Kingdom consumer, for example, may be very glad to see a Polish plumber, but may reasonably feel that, if the service is unsatisfactory, redress could be difficult to seek in Poland.
	At the risk of wearying your Lordships by straying into the wilder realms of marketing theory, there is also a much greater emotional charge tied up in the commissioning of a service than in buying a material good. A consumer may feel annoyed by the manufacture of a defective kettle and disgruntled with the shop that sold it to him, but that is a much lower emotional charge than the feelings aroused by a poor plumbing service or a rotten haircut. A defective service is perceived as a personal injury, in the way that a piece of defective goods is not—and that is not unreasonable. In short, services are not the same as goods, and it is natural for consumers to want to access them easily from people whose training and background they understand and who are close at hand so they can be got at if the service is defective. Training requirements and wage levels vary enormously in the enormously enlarged European Union, and it is to be expected that highly paid people who have undergone long trainings and apprenticeships should be anxious about any provision that seems to equate them with much lower-paid workers trained to less demanding standards. While all those reactions are natural, without opening up the provision for services there can only be a very limited market for any of us, and the risks of stagnation and a vicious circle of job losses and a reduction in consumer choice can be the only result, as other noble Lords have warned. That was always understood by the founders of the European Union.
	In conclusion, I believe that while objections to the services directive do not stand up to objective consideration, as our report concludes, we need to respect the anxieties that lie behind them. We are attempting this reform against a background of slow growth and unemployment in several European Union countries, and it is always easier to do these things in a flood tide rather than on a falling one. Opening up of the market in services is always going to be more difficult than opening up the market in goods, which must be why we have been so slow to do so. It is difficult and threatening, and debate cannot move as quickly forwards if we treat dissenters as Luddite protectionists. At the same time, we need to pass and ensure the execution of this directive, resisting the demands for the large parts of the service sector to be exempted or for progress to continue on the present painfully slow basis of harmonisation by sector. If we continue in that way, in the new world that has come to pass we shall find that many of the services that we need can no longer be afforded by any of us.

Lord Haskel: My Lords, I, too, found it a pleasure to work on this report, not only because of the privilege of working with an interesting and stimulating team—our colleagues, our chairman, our clerk and our specialist adviser, but also because the matter of the single market in services seems to have touched a nerve and "drawn an emotional response", as my noble friend Lord Giddens put it. The nerve that it has touched is fundamental to the whole European project and is connected to the social, political and economic make-up of the European Union. We learned that when we went to Brussels in March. The UK representative there, Mr Anthony Vinall, described the directive as a "political hot potato".
	So why should this directive be a hot potato? After all, the Union guarantees four fundamental liberties—free movement of people, goods, capital and services—and this directive would seem a logical directive towards completing the single market. We are told that 70 per cent of European jobs are in the services sector. My noble friend Lord Giddens put it at 85 per cent and my noble friend Lady Cohen at 54 per cent, but whatever the figure, it is a major step in securing the single market.
	As the noble Lord, Lord St. John, put it, economic studies indicate that 600,000 new jobs would be created through the increased efficiency of the services sector caused by greater competition in the market. Consumers would benefit through greater choice and lower costs. All that is acknowledged in the Government's response dated 3 October, and I thank the Minister for that response. However, when the European Commission issued its draft services directive in 2004, the reaction was more hostile. My noble friend Lord Woolmer spoke of controversy. Certainly some member states welcomed the directive as an opportunity for economic development and growth, but other members complained that it would force cuts in social standards—social dumping they called it. The noble Lord, Lord Inglewood, explained that rather well, I thought.
	As my noble friend Lord Woolmer said, it is generally the older member states such as France, Germany and Belgium that are concerned about social dumping. The newer member states see this directive as an economic opportunity. I think the problem lies in the difference in labour costs, and perhaps the numbers here are very significant. In Belgium, Sweden and Germany, the total financial burden of employing a worker including benefit costs is more than €50,000 a year. That compares with about €5,000 in Latvia, the same in Lithuania, and €8,000 in Poland; and it is that even after adding social security and other mandatory benefits such as pensions, medical payments and so on. And so cutting wages in Germany, Sweden and Belgium would mean cutting those benefits, and hence the phrase social dumping.
	As my noble friend Lady Cohen reminded us, we point out in our report that the Posting of Workers Directive means that you cannot pay Latvian wages and benefits to a Latvian working in Belgium. But the politicians we met chose to ignore that or maintain that the Posting of Workers Directive is badly enforced. Either way it would result in a cut in wages—perhaps not all the way, but the social dumpers say that the gap would be too large even after a partial closing. That is why the services directive is a political hot potato. I agree with other speakers. It is a hot potato because it means facing up to the realities of enlargement and, beyond that, globalisation. The recent voting on the constitution has shown that that is just not welcome and is something to be treated with suspicion. As a result, there is now a mood of emphasising self-interest and protectionism among some member states, replacing the earlier mood of integration. This directive is a victim of that.
	When we argue that increasing prosperity in the new member states would raise wages and raise social standards, as has happened in Portugal and in Greece, we were told by the trade unions and others that that was not relevant to the services sector: services are not like manufacturing. My noble friend Lord Giddens gave rather a trenchant response to that.
	The older members, too, were sceptical of the forecasts in job growth and investment in the services sector as a result of this directive. I think the scepticism arose not because they were doubtful about the economic possibilities but because they were concerned about the ability of their own labour markets to allow workers to move from declining service sectors to expanding ones. They were worried about their ability to increase productivity and reduce bureaucracy without political cost. They were nervous of the politics of cutting excessive employment protection laws and dealing with the social consequences which result from that, particularly with the current change in mood. This is particularly difficult for Germany where there is 22 per cent unemployment in the old East Germany which, in turn, borders on Poland, and we have yet to see how effective the new coalition government will be. I agree with my noble friend Lady Cohen that we have to take into consideration the problems which countries face with their own political situations.
	The other great matter is that there is a great variation in professional standards and qualifications in each member state. Cross border trade in services lags far behind trade in goods because each member state has its own formalities, professional requirements, rules of entry into the professions and delivery standards and requirements. The Commission suggests that this is dealt with by the country of origin principle, but some member states, generally those with the high labour costs, want harmonisation first—harmonisation in the same way that 200-odd directives worked out over the past 20 years lay down common standards for goods. The evidence that we received also showed that the professional organisations with high and difficult entry barriers were in favour of harmonisation before liberalisation. The Commission argues that harmonisation would be long, complicated and would miss out on new and rapidly developing services. I believe that it is right. It believes that its country of origin principle avoids all of that, and in their response to our report so do the Government. Quite rightly the British Government support the directive because we have already started to tackle these difficulties. Here in Britain self-employment is far easier than in many other member states, which particularly helps the services industry.
	However, if we support this directive, we must also set about preparing for it. I see that individual traders and service providers are now required to register. Certainly that will help administratively. However, the productivity of our service sector seems low compared with our European competitors. I say "seems" because it is difficult to agree on the outputs. Also the research into new technologies for our service sector is virtually nil. My noble friend Lord Giddens spoke of the importance of modern ICT in the services industry. Therefore, I hope that my noble friend the Minister will be able to assure us that the skills training, research and knowledge transfer required to make our service sector much more competitive in future will strongly feature in the work of his department.
	What will happen with this directive? I believe that its introduction is urgent. I agree with most speakers that a free market in services will encourage the enterprise, innovation and performance which the service sector needs to face up to globalisation. Europe has to raise its game and face up to outsourcing. The Chancellor made that point yesterday in his Treasury pamphlet. However, as I said earlier, the mood is wrong and the Government will have to acknowledge that. After all, you cannot force economic reform without democratic legitimacy—progress on one requires progress on the other. As the noble Lord, Lord Inglewood, implied, the European Parliament may well water down the directive and insist on a degree of harmonisation which will make the directive more palatable politically but less effective economically.
	It is, of course, impossible to have a single market in services and allow member states to opt in and out at will. Such a market would be unfair and impossible to regulate. So perhaps the answer is to create the market gradually, not by harmonisation but by introducing early the easier parts, such as construction or retail services, and giving time for the harder parts to be introduced later. When the mood changes and integration is back on the agenda, the process can be speeded up.
	Regarding the country of origin principle, I am glad that the Government say in their response that they are sorting out the issues of temporary or established service providers. My noble friend Lord Woolmer explained that. But more will have to be done to prevent a significant watering down. Perhaps a strict and informative labelling regime would make it more acceptable. I realise that this will be met with cries of, "Yet more red tape!", but it would help consumers by making them better informed. They can then decide whether they want a German or an Italian translator to translate their sales literature into Italian, or if they want a temporarily established British company to install their IT system in Poland.
	Those compromises could be acceptable, not only because they would assist the Government in upholding the standards to which we are all committed, but because this is not a single, isolated reform. It is an overall massive change, which will alter the supply of services in the Community for ever. It is a change that will make our services sector more competitive with the rest of the world. The era of global sourcing and services is fast approaching.

Lord Roper: My Lords, I begin by congratulating the noble Lord, Lord Woolmer, as chairman of the committee, both on his work in bringing the sub-committee to a consensus and on his clear exposition this morning of the substance of the report.
	Although I am now a member of the sub-committee and took some part in the preparation of the report, I was not a member in the last Parliament when the evidence was taken, and therefore I did not have the advantage to which various noble Lords have referred of visiting other parts of the European Union and learning something about the reasons for the opposition to the directive, to which the noble Lord, Lord Giddens, suggested we should perhaps have given rather more attention.
	I am glad to have followed three speakers from the Government Benches who have given such support to the directive and to the report. I am tempted to feel that perhaps the Government should send them as evangelists to their colleagues in some continental parliament—and perhaps even to the European Parliament—where not everyone seems to see things in exactly such an enlightened way.
	As has been said by almost everyone speaking in the debate, this is one of the major draft directives now before the European Union. The very helpful report that we are considering this morning takes apart and analyses some of the objections to the directive, in particular the country of origin principle, to which a number of noble Lords have already referred. Paragraph 112 and chapter 6 on consumer protection and chapter 7, which examines the risk to the social and economic standards of trans-border competition in services, are important in analysing the objections and pointing out why they are not as substantive as is frequently thought. The robust position of the report is particularly clear in its conclusions and recommendations in chapter 9. From these Benches we warmly support the report and the directive. We are particularly pleased that the draft directive is sometimes known by the name of the Dutch liberal commissioner Frits Bolkestein, who originally put it forward. However, I notice on the website that a "No to Bolkestein" campaign exists to try to stop the directive coming into effect.
	Before turning to the Government's response, which as has been suggested supports what we have said, I should like to follow the noble Lord, Lord Woolmer, and contrast the consensual support for this directive in this House and what I can only refer to as the disarray in the European Parliament. When the sub-committee last discussed the subject of the report just before the summer Recess, we assumed that the European Parliament's Internal Market and Consumer Protection Committee would have considered the draft directive last week and that therefore this debate would be able to take place in the light of the changes that had been made by the European Parliament. That was one of the reasons why this date was so convenient for our debate today. Instead, as we heard from the noble Lord, Lord Woolmer, a record number of amendments—either 1,500 or 1,600—were tabled to the draft report of Frau Gebhardt. There was such division between the political groups in the committee that it accepted its chairman's recommendation to postpone committee consideration until 21 November, with the consequence that the matter will not be considered in the European Parliament in plenary sitting until the second half of January 2006.
	I rather agree with my Liberal MEP colleague from Finland on the internal market committee of the European Parliament, Anneli Jaatteenmaki, who complained after the decision that,
	"this Parliament begins to look like a kindergarten".
	The House will know that, in general, I wish to see a strengthening of the role of the European Parliament. But when it is unable to organise its own affairs in such a way that it can give proper consideration to a directive of such importance, it makes me despair. I hope very much that something can be done about it fairly soon.
	The delay removes any chance of the directive being taken forward to a conclusion under the British presidency, as was suggested in the letter of 30 June from the Secretary of State to the noble Lord, Lord Grenfell. In it, he said that the directive was one of the matters facing the competitiveness council that it was hoped would be able to be taken forward during the presidency. The noble Lord, Lord Haskel, has already said that that is particularly disappointing in view of the Chancellor of the Exchequer's clarion call in his pamphlet yesterday, which was:
	"We must open up the hugely important market for services in Europe".
	The main problem, I fear, lies in the attitude taken by the rapporteur from the Socialist Group in the internal market committee, Frau Gebhardt, in that she wants to undermine the fundamental logic of the directive by removing the "country of origin" principle. That would be a wrecking amendment. I only hope that the noble Lord, Lord Inglewood, is right, and that it will be possible to find some consensus on something that does not go in that direction. I hope that the Labour Members of this House and of another place, including the Minister, will be able to have useful discussions on the issue with the British Labour MEPs before the appropriate votes take place.
	The noble Lord, Lord Giddens, referred to the general interest services, as did the noble Lord, Lord Woolmer. The issue needs to be further clarified, particularly on those public services provided using market principles. There we need to look again at the argument, and we look forward very much to hearing what the Minister has to say. As the noble Lord, Lord Giddens, said, the issue is part of the wider debate on the European social model, which we hear so much about and which is defined in different ways in different places. I contrast the consensus on the issue in this country with the debates on it taking place in other countries. On these Benches, we remember that the creation of the welfare state in this country, on the inspiration and writings of Lord Beveridge, was one of the examples of a British social model, which was our dimension of the European social model. I rather agree with the noble Lord, Lord Giddens, that we need not be ashamed of either the Scandinavian or the UK model of the European social model. Instead, we should try to show why they have the advantages of providing appropriate social welfare while enabling an effective market to operate for the good of the prosperity of society as a whole.
	In the Government's response to the report, Mr Pearson clearly supports the approach of the committee and the directive. The committee and the Government seem to be very much of one mind. It is therefore particularly regrettable that the European Parliament has delayed consideration of this important measure. I would be grateful if the Minister could say what progress he feels can still be made on the directive during the British presidency and, particularly, whether the Commission intends to bring forward new proposals. Rumours were circulating earlier in the year, following the French referendum and the disputes about Polish plumbers, that the Commission might be thinking again. The House would be interested to hear about that.
	This is a critical subject, as all noble Lords have said. The report is very useful. I hope that the views the committee expressed can now be taken forward.

Baroness Rawlings: My Lords, first, I thank the noble and learned Lord, Lord Woolmer of Leeds and his committee for all their hard work and reading in producing this report and I defer to the detailed knowledge that many of the committee members have shared with us in today's important debate. We on these Benches always welcome the opportunity to discuss the reports of the committees of this House. I have said before regarding such discussions that I, too, regret that we so often do not get the chance to consider them closer to their publication date.
	The debate has focused predominantly on the service directive and on opening the service market in Europe. It is essential, we would all agree, to meet the goals of the Lisbon agenda, to make the European Union the most competitive and dynamic economy by 2010. The committee's sixth report concluded that, as a result of the service directive, total consumption in the EU would increase by around 0.6 per cent, the equivalent of some €37 billion and that that would lead to an increase in total employment of up to 600,000 jobs. I was interested in all of the four points made by the noble Lord, Lord Giddens, especially regarding outsourcing, in his well-argued speech. I would expect no less from him.
	As many of your Lordships have stressed, the directive aims to create jobs, raise economic activity, quality and choice—and lower prices. Service industries generate more than 60 per cent of the EU's wealth, as the noble Lord, Lord St John of Bletso, said. Small and medium-sized businesses employ some 70 per cent of the workforce, many of them in the service sector. The service directive, therefore, should encourage EU businesses to expand from their home markets to deliver services in other member states. Expansion in business support services will assist new companies, particularly in the new member states, to grow more quickly. It would increase competition and business costs should decline across the EU.
	We agree with the committee that it would be a great loss to the UK's economy and prosperity if the provisions of the directive were not implemented, especially the controversial "country of origin" principle. As my noble friend Lord Inglewood said in his eloquent speech, as did the noble Lord, Lord St John of Bletso, a combination of labour unions and other special interest groups have stoked up significant opposition against the "country of origin" principle. A few employers' organisations are worried about increased competition and they, too, have been critical of the measure. Supporters of protectionism should not be allowed to stand in the way of economic prosperity.
	Will the Minister say what measures the Government have taken to assist British businesses who have a comparative advantage in the service sector? What have the Government done to ensure that the service directive is fully implemented? Finally, despite the statement by the noble Lord, Lord Roper, how are the Government using their EU presidency to secure the safe passage of the service directive? We support the report and again congratulate the noble Lord, Lord Woolmer, and his committee on producing it.

Lord Sainsbury of Turville: My Lords, this has been an interesting debate. The European sub-committee's report on the proposed EU Directive on Services in the Internal Market is excellent, and I am pleased to have the opportunity to respond to some of the thoughtful speeches made this morning. It is notable that debates in which there is complete unanimity are rare in this House: in my experience, to have complete unanimity on a debate on Europe is unheard of.
	We should not be surprised that there is considerable opposition across Europe to the services directive. After all, as a whole it is true that people do not like competition—particularly competition which is likely to produce great change. Equally, we should not be surprised that the passage of the services directive raises considerable difficulties. It is right to approach this matter on a horizontal rather than a vertical basis. The latter would take years and years to put through, but doing so on a horizontal basis raises some difficult issues and those need to be carefully worked through.
	Noble Lords may recall that the Government's response to the committee's report confirmed our strong support for the aims of the proposed directive. Quite simply, the Government believe that an internal market in services is essential for growth, competitiveness, employment and better regulation across the EU. I very much agree with the noble Lord, Lord Inglewood, that bringing the trading of services in Europe in line with market economics is the challenge. Dropping out is in no way an answer to these issues.
	As has been pointed out, the services sector is the largest part of the UK economy and accounts for 70 per cent of EU GDP. Many providers in the UK naturally look to Europe as a market for their services. But, as things stand, when a company embarks on cross-border trade it can encounter numerous obstacles that seem to serve no useful purpose. These barriers hinder service sector growth and job creation; companies and individuals bear unnecessary costs; and consumers get less choice and lower quality services at inflated prices. The Government believe that, were this situation to remain as it is, it would seriously hinder competition and innovation within the EU.
	Although the Government strongly support the proposed services directive, we have always wanted to see certain changes to the proposal in a number of areas. In order to reap the benefits of the directive, we must ensure that the right balance is struck between vital areas of protection and its potential to open up markets. In particular, the scope of the directive and the application of the country of origin principle should be kept as wide as possible, while ensuring that UK health and safety standards are upheld.
	In its report, the committee raised a number of points, which have also been raised during the debate, and I would like to discuss those further. One concern, shared by the UK and other member states, is the distinction between "establishment" and "temporary" service provision. The Government agree with the committee that many of the uncertainties around the definition of "establishment" can be answered by technical amendments to the text of the directive. In providing a legal definition, however, we need to ensure that it works for all service providers. Inevitably, firms of certain sizes and in certain sectors will need longer than others to test the market. We must therefore take a flexible approach. I should like to assure noble Lords that work to that end is continuing in the Council working groups under the UK presidency.
	Another issue raised in the report, and in the debate by my noble friend Lord Woolmer, is the concern about the country of origin principle and its effects on the rights and protections of consumers and employees. The Government support the committee's view and that expressed by my noble friend Lady Cohen of Pimlico this morning that this component of the directive will not lead to a "race to the bottom" in terms of regulatory or protective standards. Consumers will still be able to rely on the fact that contracts that they enter into with service providers from other member states will be drawn up in accordance with their own laws. Furthermore, key provisions of national law to protect workers will be maintained.
	We are grateful to the committee for its investigation on health and safety concerns. As my noble friend Lord Woolmer stated, one of the Government's top negotiating priorities is that our standards on health and safety are upheld in all circumstances. Our concern is that the current threshold of "indispensable" may be too high. We are working with the Health and Safety Executive and other stakeholders on amendments to protect the central health and safety rules without—and I make this point very strongly—allowing other member states to implement protectionist rules under the guise of health and safety legislation. This is a typical case where we must get the balance right between protecting what we think is essential health and safety legislation, but not allowing protectionism by other countries.
	The committee has, quite rightly, highlighted the challenges of implementing the mutual assistant framework proposed in Chapter 5 of the directive. This is critical for ensuring trust and confidence in cross-border services and delivering the proper functioning of the country of origin principle. The UK continues to work with stakeholders on provisions in this area to ensure that they are workable and practical.
	My noble friend Lord Woolmer also asked about the European Commission's sub-group on mutual assistance. Its role is to develop the mechanism to allow for mutual assistance between member states. The Commission aims to have a prototype system developed by early 2006. My noble friend also asked what work we are doing on this. We recently commissioned a study to investigate how best to implement these provisions in the UK and the likely costs of doing so. Detica, a consultancy with a strong background in this area, is undertaking the study. It will be speaking to UK government departments, agencies, regulators, local authorities and business representatives in order to build as complete a picture as possible. We hope to receive its final report in the first quarter of 2006.
	Another issue raised was services of general economic interest. The UK Government agree with the committee that these should not be excluded from the scope of the directive. Past liberalisation of services such as telecoms and transport has produced huge benefits. We can see those. On that basis, we think that we should not allow other areas of exclusion to take place.
	As my noble friend Lord Woolmer said, the Government support the exclusion of publicly funded healthcare from the scope of the directive. Publicly funded healthcare is not a normal market. It aims for financial efficiency while providing optimal medical care, rather than being a profit-making enterprise. Therefore, we believe that it is inappropriate for this sector to be covered by the directive. We do not believe that that will open the door for widespread exclusion of services of general economic interest, as a carve-out for publicly funded healthcare will not exclude non healthcare ancillary services that are purchased by the NHS from buyers in the marketplace.
	I shall now respond to a couple of further points made in the debate. I say to my noble friend Lord Haskel that I do not think we should try to bring in the service directive part by part. We need to work through these difficult issues that apply across the board and then get on with it. If we start trying to produce this part by part, we will be back in the position that nothing will happen for a very long time.
	I assure my noble friend Lord Haskel that we are committed to addressing the competitiveness of the UK service sector. Skills, innovation, enterprise, competition and investment are key drivers of productivity and central to the UK's competitiveness. These issues are central to what the DTI is trying to do. I should add that technological innovation in services is a very important but difficult area, mainly because so very little is known of this. It is not an area which has been much studied. Therefore, it is not easy to see how we can intervene on those issues.
	The noble Lord, Lord Roper, asked what will happen next. As noble Lords will be aware, since the House of Lords inquiry took place, the UK has taken over the presidency of the Council of the European Union. Our aim continues to be to make real progress towards agreeing the directive. In the Council working group we have continued the excellent work of the preceding Netherlands and Luxembourg presidencies in making technical improvements to the directive, and we are now moving into discussions on some of the weightier issues, such as the scope of the proposal, the protection of workers and the country of origin principle.
	As mentioned by my noble friend Lord Woolmer and other speakers in this debate, progress in the European Parliament on the directive has been delayed, with the vote in the Internal Market and Consumer Protection Committee having been put back to November. This will allow committee members more time to reach agreement on compromise amendments. It means that the First Reading in the European Parliament will not now take place until January 2006. The position of the Commission and Commissioner McCreevy is that they do not intend to produce any further ideas on the proposal until the Parliament has considered it. The European Parliament has an important role in shaping the directive, and we look forward to seeing its proposals.
	During our presidency we have set ourselves the goal of making solid progress at working level on the services directive by the end of year so that we can leave it in good shape for the Austrian presidency. There are still a number of key issues to be resolved, but it looks like we will be able to achieve the progress we want on the directive, which is of such central importance to the UK.

Lord Woolmer of Leeds: My Lords, I thank the Minister for a most thoughtful and helpful response to the debate, and all noble Lords who have contributed to a thoughtful and positive debate. The services directive, and all that it represents, is of enormous importance to the citizens of Europe, whether as employees, consumers or business people. It is a massive challenge to the institutions of Europe—the Parliament, Commission and Council—and whether they are able to face up to taking the necessary decisions. Members of the European Parliament would do well to read today's debate before their considerations in November and January.

On Question, Motion agreed to.

Education and Aid Programme

Lord Thomson of Monifieth: rose to ask Her Majesty's Government what is their policy on the role of education in their overseas aid programme.
	My Lords, I can put simply my reason for having this debate. I wish to emphasise before the next Commonwealth summit in Malta in November the vital importance of education within the aid programme, particularly within sub-Saharan Africa. The Government have been taking welcome initiatives with their Africa commission and their presidency of the G8, which should now be vigorously pursued through the machinery of Commonwealth co-operation.
	I declare a personal interest as an office-bearer of the Council for Commonwealth Education, which I helped to found around 50 years ago. We set it up to enable interested politicians of all parties to join interested educationists in trying to create a climate of informed opinion about the role of education in aid policy. At that time Harold Macmillan's "wind of change" speech was blowing across the continent, and, if I remember rightly, it was called "Africa year". Amid the rhetoric, some of us felt that education would remain the key to making a success of independence. Now, 50 years on, we have "Africa year" again, and sadly the sub-Saharan region of Africa is one of the most impoverished and turbulent areas of the globe's surface.
	I think of Malawi, which I used to know as Nyasaland, which had close links with Scotland and the Scottish Kirk. I remember asking a Parliamentary Question in those far-off days about how many graduates Nyasaland had. The answer was around 20, and at that time more than half of them were in detention because of the government's imposition of the Central African Federation proposals. I was interested to see, 50 years on, the report from the Government's Africa commission on the situation in Malawi, where it has been making a heroic effort since 1994 to achieve free primary education for all. It has introduced an imaginative and radical new teacher training scheme, which produces a high volume of teachers at a low cost. I am sure that everyone wishes it well in that.
	However, the commission also says, for example, that a survey showed that 25 per cent of teachers who started work in rural areas in January 1999 had left by October the same year. So there are great problems to overcome. At the other end of the educational spectrum, throughout Africa, a disproportionate emphasis on primary education to the exclusion of other forms of educational development has produced a state of crisis in university education. One of the most depressing sentences in the Africa commission report is that which shows that at present there are more African scientists and engineers working in the USA than in Africa.
	Such facts underline the importance of taking a holistic approach to educational development needs, as the report emphasises. Primary education expansion is very important but it depends on a flow of trained teachers, an adequate supply of graduates from the African continent, and relevant postgraduate research in African universities. We would therefore like to see DfID's policy develop much more comprehensively to address levels of education other than primary. We would also be very cautious about trendy new gadgetry; for example, some schools cannot afford computers, and there is often no electricity. I have been through such issues often. There is still a very important role for old-fashioned textbooks, especially if they can be published in Africa economically by African publishers.
	We very much welcome the Department for International Development's greater commitment to international education and educational development. We look forward to closer partnership between that department and the Department for Education and Skills, particularly because the latter is a repository of professional experience in the UK's education systems that can be shared with our partners abroad. In that context, we should not overlook the close inter-relationship between our own education system and those of other countries, in which Commonwealth co-operation can play a constructive part.
	All of that points to the need for joined-up government, especially in areas where international migration has an impact on development. Joined-up thinking is not always evident, as is evident from the Government's decision to charge for issuing visas and to impose visa restrictions on students accepted for study here. Those policies are a direct threat to the very targets set by the Prime Minister for an increased number of students from abroad. I will listen with great interest to the Minister's remarks on that front.
	Britain should use the Commonwealth much more fully as a vehicle for assisting development. Middle-income countries often have experience that is more relevant than our own to the poorest countries. The United Kingdom could help to mobilise that experience through the Commonwealth secretariat. I speak as the last Secretary of State for Commonwealth Relations that the United Kingdom ever had, and I am bound to say, as a politician who has taken an active interest in those affairs during my lifetime, I do not believe that the multi-racial Commonwealth would have survived as a force for good in the world if it had been simply left to the politicians. At its heart, the Commonwealth is an extraordinary network of personal relations in which the education profession has a proud role.
	On this year's Commonwealth Day, in Westminster Abbey, Her Majesty the Queen said:
	"Education is sometimes described as the golden thread that binds the Commonwealth. Our shared use of a common, world language—English—has underpinned a long and rich tradition of educational co-operation".
	Long may that remain so.

Lord Judd: My Lords, as a fellow patron of the Council for Education in the Commonwealth, I very much I endorse the message of the noble Lord, Lord Thomson of Monifieth, concerning education and the role that the Commonwealth has to play. His credentials do not need to be underlined. His message needs to be taken seriously. I am sure that we all greatly look forward to the maiden speech of the noble Lord, Lord Stevens of Kirkwhelpington.
	Education is the key to economic and social development, to health and to living, as distinct from merely existing or struggling to survive. In 2000, 189 governments, under the aegis of the United Nations General Assembly, agreed on millennium goals to be achieved by 2015. These included universal primary education and, by 2005, the elimination of gender discrimination with as many girls as boys at school. Women are certainly central to development.
	Today, the reality is that some 100 million children are still out of school in approximately 70 countries, and 60 per cent of those are girls. At the present rate of progress it will be 2150 before Africa meets the target of all children into school. Meanwhile, it has been calculated that if every child in the world completed primary education, at least 7 million HIV infections could be prevented in the next five years.
	Against that background, the Government's commitment to the Education for All—Fast Track Initiative, with £40 million to back that commitment, is to be warmly welcomed. But very much more will have to be done by us and the international community if the Millennium Review Summit's renewed commitment to,
	"eliminate gender inequalities in primary and secondary education by the earliest possible date, and at all educational levels by 2015",
	is to be achieved. In that context, the call of the summit for the elimination of user fees for primary education is particularly important.
	We live in a totally interdependent global community. In the UK, relevant education has to be rooted from the earliest years in an understanding of that. There are many indications that schools in Africa and the UK, with international partners in the other continent, do better in all respects, not least academically, than those without them. I am therefore heartened to learn that the Department for Education and Skills, with its recently published international strategy, Putting the World into World Class Education—designed to equip children, young people and adults for a life in global society and for work in a global economy—is encouraging every school in the United Kingdom to have an international partner. It is altogether good news that DfID is providing £1.3 million for a programme of school partnerships led by the British Council, the UK One World Linking Association, VSO and the Cambridge Education Foundation.
	The BBC, which has been hoping in the current year to help to promote 1,000 partnerships between schools in the United Kingdom and Africa, has, I understand, excitingly already exceeded that target by 800. Every Anglican diocese in England has a link to a diocese in the developing world. To prove the validity and relevance of faith schools, as an Anglican, I am convinced myself that linking has urgently to be brought into the classrooms of every Church of England school.
	Beyond all of that, practically based linking between professional groups is indispensable, not only to development—it is indispensable to development—but also to education in its wider social sense. Community-based international partnerships can also have an imaginative part to play in generating the understanding which is essential if we are to build social cohesion within our own increasingly culturally diverse society.
	In a voluntary capacity, through my association with the work of BUILD—that is, Building Understanding through International Links for Development—I have been impressed by the way in which a coalition of 50 agencies, including VSO and OXFAM—I am glad to have been a director of both—has been formed to foster the development of international partnerships between community-based organisations and counterparts in the developing world. The importance of the £1 million to £1.5 million provided by DfID for the development educational programme in the United Kingdom cannot be overestimated, and I hope that it is just the beginning.
	Towns, schools, local authorities, faith-based organisations, hospitals, arts, sports and cultural groups—and, perhaps most important of all, the universities—have a vital part to play. Currently our universities put a lot of effort into partnerships with universities in the affluent parts of the world. They urgently need to balance those activities with partnerships with universities in the developing world. The disciplines of joined-up government and strategic thinking, both for humanitarian and global security reasons, demand the maximum possible co-operation between DfID, DfES, the Home Office, ODPM and other government departments. We need to see evidence of this, and I was so glad that the noble Lord, Lord Thomson, emphasised the point.
	Most important of all, we need the driving force of vision. No longer should we tolerate a world in which any child, anywhere, should be destined prematurely to go to the grave without having had every possible encouragement to fulfil their intellectual and creative potential. That, for me at least, is why education should take pride of place among the priorities of DfID.

Baroness Hooper: My Lords, the importance of education for the future of every country, whatever its state of development, cannot be in doubt, and I look forward to the Minister's response. I thank the noble Lord, Lord Thomson of Monifieth, for introducing this important debate, and I fully agree with the points he has made. To add to his remarks and to those of the noble Lord, Lord Judd—with which I also agree—I want to refer to the importance of tertiary education, which should complement primary and secondary education. Given that government policy should aim to be both comprehensive and joined-up, can the Minister explain in her reply a particular point: why is the budget for the Foreign Office's Chevening Fellowship scheme being squeezed and the numbers reduced?
	I ask that because, sadly, British universities are no longer the first choice for overseas students. As the noble Lord, Lord Thomson, made clear, overseas fees and visa requirements, for which successive governments bear responsibility, are proving to be barriers. Moreover, since the British Council no longer seems to play its former role in education and educational exchanges, the Chevening Fellowship scheme has filled a very important gap. The noble Lord, Lord Thomson, referred to the Commonwealth. I would add to that and underline the needs of students in the British Overseas Territories for tertiary education. Further to illustrate the point, recently I made an IPU visit to Bolivia. Not only is the president of Bolivia a former Chevening Fellow, but also six out of the 12 leading politicians, industrialists and representatives of the media gathered together by the British ambassador for a meeting. If anything were needed to emphasise the importance of the scheme, that example should serve.
	My second point addresses the terrible aftermath of the series of recent earthquakes, culminating in the present situation in Pakistan. Furthermore, we should not forget the disastrous floods and mudslides caused by Hurricane Stan, which has affected El Salvador, Guatemala, parts of Honduras and Nicaragua. Given that these natural disasters have destroyed many schools, a large number still with children in them—some have said that it means the loss of a whole generation—can the Minister say whether the Government have any plans to provide funding for the reconstruction of schools? Will they also ensure that proper risk assessments are made and strict building conditions imposed and monitored so that new buildings reach the recognised standards required to withstand the worst effects of earthquakes and natural disasters? I learnt recently that in a serious earthquake in California—in Los Angeles or San Francisco—60 people died. Of course, we all know that in the recent earthquake we are talking about thousands of people.
	Finally, I should be very interested to know how much of the United Kingdom's contribution to the European Union's development aid programme goes towards educational purposes. What kind of direction over such projects does the United Kingdom have?

The Lord Bishop of Coventry: My Lords, if someone were to discover an existing education infrastructure consisting of thousands of schools and teachers in some of the poorest and most rural parts of Africa, I would expect educationalists to beat a path to his door. When the providers of such education are those also running the most effective civil society organisations across Africa, and given the rhetoric of community-led participatory development, I would expect development agencies to beat a path to their door. Moreover, given that the capacity of these schools could be doubled, or even tripled, within a few years with minimal sums of money, and given that universal basic education is our second millennium development goal, I would expect aid experts to beat a path to their door. Yet, so far, they have not—at least they have not done so in great numbers. I am grateful—as are others—to the noble Lord, Lord Thomson, who has given us the opportunity to consider where the gaps and opportunities lie in aid and education matters.
	As your Lordships will know, in this country the Church of England boards of education are statutory bodies providing the education of 25 per cent of primary school pupils and 5 per cent of secondary school students. I am grateful to the noble Lord, Lord Judd, who, by his reference to the links that exist and potentially exist between Church of England schools and those in the developing world, has saved me at least a paragraph of my speech.
	Historically, the Anglican Church has been a pioneer in education for all, not only in this country but also in Africa and other parts of the developing world. Our overseas education networks through the Anglican Communion's 80 million members mean that we have much to teach as well as to learn. But the Church needs to be drawn out of its silo—I apologise for the cliché; it is one to which I have recently become addicted—as, indeed, does government aid. We need to be drawn out of our respective silos in order to create a synergy with the most significant bilateral community-based education network literally in our midst.
	The quality work and the early encouraging results of the development community's engagement with Muslim schools in parts of Africa should serve to strengthen the desire to work with Church schools in other parts of Africa. Indeed, the most reverend Primate the Archbishop of Canterbury has already initiated a project in this respect in Burundi, where, as I understand it, schools which were founded by the Church and taken over by the government are being returned to the Church. I also understand that a similar project is in mind in Nigeria.
	The Commission for Africa, which the House has debated, encourages working in partnership—not least in post-conflict reconstruction efforts in countries such as Burundi and southern Sudan. I quote from its section on improving the quality of aid to Africa, which states:
	"Often the most cost-effective service delivery is provided by faith based organisations".
	Chapter 6 of the commission's report, which focuses on education and aid, speaks of the priority action needed in the international community to develop partnerships with non-state actors as well as governments. Precisely because of whom Church leaders and educationalists are, with their weaknesses as well as their strengths, they are essential community-based partners in any aid and education strategy.
	In addition, I believe there is an untapped potential for better collaboration between UK-based NGOs and traditional mission agencies such as the Church Mission Society. Quite rightly, secular, non-religious NGOs must remain distinctive in their approach to aid and development matters. There is, of course, already good collaboration between faith-based aid and development agencies such as Christian Aid and TEAR Fund with other relief agencies, not least in the current crisis in Kashmir. Nevertheless, the accumulated experience and wisdom of many mission agencies whose personnel have spent many years working on local educational projects should not be set aside as irrelevant.
	I hope that the Minister and the Government will take seriously their own vision of working with the Church in Africa and in the UK on gender equality, teacher training and community involvement in developing relevant curricula. I look forward, with others, to the delivery of that policy soon.

Lord Hunt of Chesterton: My Lords, it is a pleasure to speak in this debate, introduced by the noble Lord, Lord Thomson of Monifieth, who was, as he proudly said, one of the last Commonwealth education officers. My father was a High Commissioner who was much inspired by his leadership.
	The Government's aim in its aid programme is to reduce poverty but, like other policies, this is complex and must be considered in relation to many other aspects of policy. Poverty reduction is sustainable only when the poorest communities are empowered to take responsibility for their future through knowledge, strength of society, security from national disasters and war, and material support. In many cases, spiritual strength also plays a vital role, as we saw this week in Pakistan.
	Education brings information and socialisation, as well as skills and knowledge. It was remarkable to see in Pakistan this week how poor villagers have devoted so much of their resources to education. It was tragic and inspiring to see on television a father extracting maths books from the rubble along with his crushed child. If these remote communities take education so seriously, surely aid programmes should do so as well. We hope that the Government will be helping these schools, and schools everywhere, with relevant programmes. That is also important in avoiding corruption; in some countries the money for education is not getting through.
	The building of schools is very important. It is also important that children in schools should know about safety aspects. In Pakistan the children in the schools who survived were the ones who hid under their desks. In America, this is standard practice. People in schools are told that if there is an earthquake, they should get under their desk, as my daughter found when she was at school there.
	I should like to reflect on what my noble friend Lord Judd has said. DfID is an efficient department and it is highly stretched. If we are really to co-ordinate all the various contributions of British organisations in government and in the non-governmental world, we need a co-ordinating effort. I was very pleased to hear that such efforts are being made and that DfID is supporting them outside government. That is progress.
	I declare an interest as a professor at University College, where we have colleagues from developing countries on educational programmes, and president of an NGO. I am a former head of the Met Office, where there was a substantial programme of training people in developing countries. My point, which the noble Lord, Lord Stevens, may take up, is that government agencies and laboratories in many parts of the UK can contribute and are contributing to education programmes to relieve poverty but the co-ordination and appreciation could be improved. We need effective partnership programmes. Many parts of the United Nations, such as the World Meteorological Organization, have very effective programmes. But sometimes in Africa these are suffering greatly. A DfID report last year commented that it is almost impossible to monitor climate change because of the lack of trained people available to undertake training.
	We will be trying to help with this situation in a conference which we will be holding in Accra in November in conjunction with UK NGOs, the government of Ghana and other African organisations. It is absolutely essential that education, the arts and science come together to help inspire people to be involved in these scientific and technical areas. We would like to have more support from DfID for those programmes.
	My final point in a way reinforces the point of the noble Baroness, Lady Hooper. One of the important aspects of educational exchange is to encourage specialists when they come to the UK. They should have not only some experience in specialist education, but also some knowledge and some understanding of the political and administrative arrangements in the UK. Sadly, the British Council provides zero funding for all technical people who come to UK. It does not give them even a cup of a tea and a train ticket to London to hear the House of Lords—which might be revealing. I have raised this issue time and again and I find that officials in the field say that it is a tragedy that these technical people come to the UK and the UK simply tells them to go to a laboratory, study there and go home again. It is crazy. I hope that the Minister will agree that it is crazy and will do something about it.

Lord Stevens of Kirkwhelpington: My Lords, it is a great honour and privilege to address noble Lords in this House in my maiden speech in such an important debate.
	On 24 May, I was introduced to your Lordships' House by my noble friends Lady Goudie and, my predecessor as Commissioner of the Metropolitan Police, Lord Condon. I thank them sincerely for their help and support on that day. I have been overwhelmed by the generous welcome I have received from your Lordships and the staff of this House. It is extraordinary to come from the outside into a place where you would never have expected to have been and to receive such a welcome. I am also indebted to officers and staff for their help and support. That support has allowed me to take my courage in both hands and make my maiden speech. If it had not been for that support, perhaps I would have put it off for another month or two.
	Another reason for making my maiden speech today is my passion and close personal interest following previous charitable work in the Western Sahara and the twinning of the township of Alexandra in Johannesburg in South Africa with the London Borough of Southwark. Education, together with policing, was a major part of our activities.
	I turn to the debate before us. Education is a fundamental human right. It leads to the fulfilment of an individual in every aspect. The report of the Commission for Africa stated that countries which have not met their target in delivering education will have a higher mortality rate and more underweight children. A World Bank study in 17 sub-Saharan African countries shows a very clear correlation between education and lower HIV/AIDS infection rates. It further showed that providing girls with one extra year of education boosted their eventual wages by up to 20 per cent.
	I would submit that the case for education is overwhelming in both human and investment terms. I am sure that all your Lordships will welcome the pledge for education at the World Education Forum in Dakar in Senegal in 2000. It was made by the international community. The assembled nations committed themselves to providing free and compulsory education for every child in the world and achieving adult literacy by 2015. Likewise, commendably, Her Majesty's Government committed themselves at the G8 Summit in Gleneagles to "turning words into actions" and, as we have heard from the noble Lord, Lord Judd, to £1.4 billion of funding for education in the next four years.
	These actions surely are to be welcomed and commended. For those of us who are privileged to have been involved in some of those activities in the front line, I would commend more co-ordination on occasions, though that is not in any way a criticism.
	We also learned from those who we were assisting in so-called educating. We have learned about the priorities of life—human dignity, the will to improve and the innate goodness of the human spirit. For us who were involved, the education was a two-way process. To conclude, much has been done but much needs to be done and the goals although formidable can be achieved, provided that the promises made time and again by the international community are kept.

Lord Newby: My Lords, on behalf of the House I congratulate the noble Lord, Lord Stevens of Kirkwhelpington, on his maiden speech. I do not need to enumerate his many achievements in his police career to your Lordships, because they are very well known. We welcome him to the House today and look forward to the contribution that we hope he will be able to make in the months to come, as we debate the difficult issues of terrorism and policing in your Lordships' House.
	Although the title of today's debate is broad, we are concentrating on Africa, because Africa lags behind. Like other noble Lords, my starting point was the analysis and proposals of the Commission for Africa. The commission very sensibly looked at education in the round and said that rather than simply concentrating on primary education it was necessary to look at secondary, vocational and higher education as part of the overall approach. The commission concluded:
	"All elements are part of a complementary and mutually reinforcing system".
	The commission gave depressing evidence of why such an approach was necessary by noting that in many countries there was a chronic shortage of teachers. In Ghana, there were only 25 per cent of the necessary number of teachers, and in Lesotho merely a fifth. Even when there are teachers, they are often underqualified; in northern rural Namibia, only 40 per cent of teachers have teaching qualifications. As a result, the commission was clearly right in arguing that to boost the teaching force, the number of people progressing to and attaining higher education must increase. That is easier said than done, however.
	I shall give an example of some of the problems and the efforts being made to overcome them by describing what is happening at the North-West University in South Africa. It is one of the more successful African countries economically and in other respects, so the problems encountered there are considerably less than in other parts of the continent, but they are very significant. I declare an interest as a trustee of the university's fundraising arm in the UK.
	The North-West University was created out of the former Afrikaans Potchefstroom University and the black University of the North-West. That created a number of problems, as noble Lords can imagine, but one was the disparity of attainment of new students at the two parts of the university. Not surprisingly, the black students were less well prepared for university than their white counterparts; as a result, not only was the average attainment level on recruitment lower among black students but they had more difficulty in progressing beyond the first year and many as a result failed to complete the course. Problems were particularly acute in the standards of maths and science.
	The university realised that the only way in which to tackle the problem was to get involved itself in improving the standards of teaching and management in the schools in the region from which they were seeking to recruit many of their students. The university formed a partnership with the provincial education department, the national business initiative and local communities to deliver a three-year programme in selected schools to improve the overall quality of education of school leavers and to make the schools a focal hub of their communities. They are looking for a step-change in community and human capacity development, with programmes that are well under way and are already producing positive results.
	At the same time, however, the university realised that it needed to improve the quality of its own management, and with that in mind it formed a partnership with London's South Bank University to develop its HR function, its corporate governance and, interestingly, the whole question about how to manage a multicultural student body, because South Bank University has a very multicultural student body as well. Again, that is producing positive results, and North-West University and South Bank University are both confident that these approaches are replicable elsewhere in Africa. Indeed, South Bank University also works with universities in Uganda and Nigeria on management and curriculum development issues.
	What impresses me about these programmes is that they are based on the development of the people—the students, the teachers and the professional staff—who are the key to improving educational performance in Africa. Investing in people, therefore, should be the priority for the UK Government in looking at how they can best support educational development across the continent. That is not to say that the physical infrastructure—schools, buildings libraries and equipment—is not also important, but I think that this should primarily be an area in which local African governments supported by the World Bank should take the lead. The UK has a comparative advantage in teaching management skills for the education sector and on curriculum development. We should recognise and exploit them.
	The kind of programme which I have described, however, will succeed only if it has the support of African governments as well as of the UK and other donor countries. One of the positive results of the Commission for Africa was to help re-energise governments in Africa in terms of further and higher education. NePAD, for example, has recently embraced the concept of renewing the African university project. The African Union, I understand, is meeting at the end of this month to co-ordinate its approach to university development. There is a real sense of momentum for which the UK Government can take some of the credit.
	There is, however, also a growing scepticism that the Gleneagles promises and the funding targets in the Commission for Africa report may not be met, and growing concern that the recent momentum could be dissipated. In concluding, my questions are therefore as follows. What is the current state of the play on implementing the Commission for Africa proposals, not least in respect of education? And specifically, what commitment are the Government able to make to help renew Africa's universities both in funding and in helping to co-ordinate the UK higher education sector's clear and genuine willingness to form partnerships with its African counterparts?

Lord Joffe: My Lords, I too thank the noble Lord, Lord Thomson of Monifieth, for initiating this debate on a subject that is so important to the future of the developing world. I also congratulate the noble Lord, Lord Stevens, on his impressive maiden speech. I am glad that he did not delay it too long. I declare an interest as a trustee or adviser to a number of charities involved in education in the developing world.
	World Bank statistics show a direct correlation, which it measures at 89 per cent, between a nation's economic wealth and the level of education among its citizens. Nothing could better demonstrate the crucial importance of education in the battle against poverty. The millennium development goals focus on increasing access to primary education. Such education is clearly the essential starting point. However, formal education at primary and even secondary level is not going to produce the entrepreneurs and business leaders who will create a vibrant economy, which in turn will create the employment and wealth to raise standards of living. That can be demonstrated by South Africa—to which, like the noble Lord, Lord Newby, I refer, although I shall refer to another university there.
	South Africa is far better placed than most countries in the developing world to compete in a globalised world because of its excellent infrastructure and the wealth of its elite white population. Yet in South Africa today 38 per cent of the population live on less than $2 a day and unemployment is estimated at a horrifying 41 per cent. Most black children go to primary school and each year 1 million black children leave school, of whom 81 per cent enter the job market to compete for jobs with the 41 per cent unemployed.
	Only one out of every 100 of these school leavers graduate from university. Against that background, the challenge for education and government is how rapidly to create highly motivated, skilled and entrepreneurial individuals who will build businesses and in the process help to develop a vibrant economy, which in turn will create employment and the wealth and opportunities ultimately to erase poverty.
	What government cannot do is to create these businesses. What they can and must do is to create an environment in which entrepreneurship and business are encouraged and stimulated. How, then, is this challenge to create a vibrant economy to be met? There is no simple way but I want to dwell on a very exciting model set up in South Africa which could be replicated in other parts of the developing world if aid were to be made available. It is called CIDA City Campus and is a low cost but high quality university focused on the training and development of the entrepreneurs and business leaders of the future.
	Only six years ago Taddy Blecher, an actuary by training, who believed passionately that higher education was the driver of wealth, decided that he would create a business university which would provide the gateway for those who would otherwise be excluded. He would tap the potential of those students who were too poor to go to university and give them the opportunity to transform themselves into business leaders and entrepreneurs. He decided that his university would offer only degree, and that was a four-year course in business administration. He looked out to the rural and poorer areas of South Africa to find poor but capable students who had the potential but no chance of getting entry to the traditional universities because they could not afford the fees. He offered them a deal. They would get a virtually free four-year scholarship leading to a degree in business administration which would focus on entrepreneurship, business and technology. However, the university would be based on a "no handouts" principle. In return, the students would have to help to run the university on a day-to-day basis and in their vacation they would have to return to their home villages to teach groups of their people about relevant issues such as money management basics, small business creation and HIV/AIDS awareness. Within five years of graduation they must fund another student from their home town for his or her degree. CIDA students would undergo a four-year degree rather than three years and spend up to triple the time in classes and tutorials compared with those taking a degree at a traditional university. The results have been phenomenal. In the national stock exchange exams CIDA students have outperformed students from around the country with the highest pass rates nationwide. Entrepreneurship is compulsory and with the substantial input of Sir Richard Branson, the Branson School of Entrepreneurship at CIDA will open later this month.
	What greatly impressed me was the confidence, commitment and maturity of the first group of graduates whom I met, who were ambitious not only to have successful business careers but also to make a real contribution to their country and their communities. After only six years there are 1,300 students at CIDA and another 20,000 applicants hoping to be accepted. The cost per student is one-third of the cost of students at other universities. President Mbeki has commended CIDA in the South African parliament and Mrs Mbeki has agreed to become the first chancellor of CIDA. CIDA has had two graduations to date and has injected a total of 267 business graduates into the economy.
	In the many years that I have been involved in development I have not seen an initiative with so much potential and one which I believe could be replicated throughout Africa and the developing world. I commend to DfID that it studies this model of low cost, high quality education of future business leaders and entrepreneurs which must surely be one of the keys to eliminating poverty in the developing world.

Baroness Tonge: My Lords, I congratulate the noble Lord, Lord Thomson, on securing this debate, which lies at the core of what I learnt in eight years in the other place as spokesperson for my party on international development. Education is a major tool in development; that is the message.
	I want to tell noble Lords about Rwanda, which has not been mentioned yet. As a member of the Select Committee for International Development, I visited Rwanda early in 1998. Noble Lords must remember that although the main events of the genocide were in 1994, when we visited in 1998 in the six months before we arrived there had been another 6,000 deaths. The genocide continued in Rwanda for many years and it is continuing in the Congo now. It was a terrible experience. The streets were empty. The bellboys in the hotels were crouching in the shadows. No one would make eye contact with anyone else. You did not see any children about, unless they were in NGO-run missions for traumatised children, or child-headed households, or orphans. It was a terrible situation. Government buildings had been shelled.
	We went one day to see a genocide site, where there were fast-disintegrating, drying-out bodies of people who had been massacred during the genocide. I remember that night coming back that although we had armoured trucks in front of us and armoured trucks behind us—and it was not even getting dark—the driver was terrified lest we did not get back to Kigali before dark, because Rwanda was so dangerous. I remember Kipling's "Fear" going through my mind. Do noble Lords know it?
	"Ere Mor the Peacock flutters, ere the Monkey People cry, Ere Chil the Kite swoops down a furlong sheer, Through the Jungle very softly flits a Shadow and a sigh— He is Fear, O Little Hunter, he is Fear!".
	"Fear" was Rwanda then. As if on cue, black kites were gathering in the sky, which we were told denoted yet another murder somewhere in Kigali. It was a terrible, terrible place.
	I returned to Rwanda in 2002 with the Inter-Parliamentary Union, and I could not believe what I saw. It was a complete transformation—people everywhere, walking tall, stopping to chat, shops open. The government under Paul Kagame was functioning well; we know that it was not doing so perfectly, but we shall not debate that today. Above all, wherever we went, we saw schools open and lines of children in the little uniforms that they all seem to wear in Africa. They always try to afford the school uniform. Children were marching everywhere in orderly lines with their teachers. One day the whole place seemed to be marching children along the roads, and we learnt that it was national vaccination day and all the children from all the schools were being frogmarched by their teachers to get their jabs.
	Rwanda still has much to do and it has many problems, but this year more children are being educated than before the genocide started. Some 91 per cent of Rwandan children are enrolled in primary schools. Since 2001, they do not pay any fees. There is gender parity; the same number of girls and boys are being enrolled. Some 45 per cent complete their course. That needs working on, but it is a lot better than in many other African countries. In the secondary schools, sadly only 15.4 per cent are enrolled as yet, but it is great progress. The Rwandan government in their poverty-reduction strategy have made education their priority. They have developed a strategic plan for education, which includes trying to give every child in Rwanda nine years of education, training more teachers and encouraging higher education—all the things that we have been hearing about.
	Why did the transformation occur? It is difficult as a member of an opposition party to do this, but I suggest that it is because of our Department for International Development. Our Government ensured that aid to Rwanda would concentrate on education. DfID is the largest donor, contributing £10 million over the past five years to education alone and another £37 million to general budget support to the government of Rwanda. That is a big success story. We should congratulate DfID on its efforts in Rwanda, which have transformed lives, especially those of the traumatised children there.
	There is much to do all over the developing world, however, as we heard this morning. I am confident that our Department for International Development knows what to do, and I know that it sees education as at the core of those efforts. I only hope—this is the barb in the tail—that this Government will not ruin the work of DfID by pursuing the wrong foreign policies, trade agreements and arms sales.

Baroness Northover: My Lords, I too thank my noble friend Lord Thomson for raising this extremely important subject, and pay tribute to all his work in the area over the years. I also congratulate the noble Lord, Lord Stevens; it is surely a credit to him that, with all his expertise in so many other areas, he chose this subject on which to make his maiden speech.
	It is a key year for international development, and this year Make Poverty History has hit the headlines. There are three arms to that campaign—aid, debt and trade. By that, I mean the reduction in debt of the poorest countries, the increase in aid to 0.7 per cent of GNP, and the removal of barriers to trade for the benefit of the very poor. Clearly, economic development rather than aid or debt relief has the greatest potential to pull countries out of poverty. The cases of India and China are obvious examples. But for that to happen, countries desperately need an educated and trained workforce, which is why simply the removal of trade barriers may well hurt the poorest countries while benefiting those better-off developing countries. Aid and debt relief then play their parts in trying to enable the poorest countries to catch up with more developed nations.
	Universal primary education is the second MDG, as was pointed out by the noble Lord, Lord Judd, but it is the key at the least to the first, on halving world poverty; the third, on improving gender equality; the fourth, on reducing child mortality; the fifth, on improving maternal health; and the sixth, on reducing deaths from AIDS and other diseases. Yet, despite overwhelming evidence that education—particularly for girls—can increase economic growth and break the cycle of poverty, more than 100 million children do not attend primary school in developing countries, as was said by the noble Lord, Lord Judd.
	As Jo Becker from Human Rights Watch recently put it:
	"Education breaks generational cycles of poverty, protects children from exploitation and improves their very chances of survival".
	We heard from the noble Lords, Lord Hunt and Lord Joffe, the right reverend Prelate the Bishop of Coventry and others how much education is valued in developing countries. Sometimes that seems rather ironic to me as I dynamite my children out in the mornings, especially my boys. They drag rather unwilling to school but, when they visited some schools in a township outside Cape Town, they too could see how important schooling was for the children of their age, especially if they were to combat AIDS. Whether that makes them easier to get up in the morning is another matter.
	My noble friend Lady Tonge mentioned the position of girls; my daughter is a little easier to get out. UNICEF, Save the Children, Oxfam and many other organisations are particularly concerned that girls are most likely to miss out on education, even though the impact of education on development is stronger when girls are educated. The figures are in some ways a little misleading. Of those not in education, 60 per cent are girls, but it is at the higher levels that the girls are really missing. Oxfam points out that the aim was to achieve gender parity in primary and secondary education by 2005; the noble Lord, Lord Judd, emphasised that. That first target will be comprehensively missed. Neither the G8 leaders in Scotland nor the world leaders at the UN world summit in New York last month explicitly acknowledged that failure in their reports. Will the noble Baroness comment on why they missed that out?
	That target was set for 10 years before the other MDGs, partly to reflect the belief that it was achievable. It also reflects the critical importance of girls' education to the achievement of those other MDGs by 2015. Education for girls and women helps them to improve their own lives and the lives of their families. Girls who complete primary education are much less likely, for example, to become HIV positive. Their children are more likely to survive infancy and to be healthy. As the UN Secretary-General stated on 2 March, 2005:
	"Without achieving gender equality for girls in education, the world has no chance of achieving many of the ambitious health, social and development targets it has set for itself".
	Due to poverty, girls are not in school. The more expensive education is, the less likely it is that families will invest in the education of girls. In Kenya, for example, before school fees were abolished, girls were more than twice as likely as boys to be withdrawn from school. But after Uganda abolished fees, girls' enrolment increased by 20 per cent and among the poorest fifth of girls, it went from 46 per cent to 82 per cent. In other words, it is an achievable goal.
	The Africa Commission put renewed stress on another area—tertiary education. That is an interesting development. It is, surely, right to make that emphasis and the noble Lords, Lord Thomson and Lord Newby, and the noble Baroness, Lady Hooper, rightly stressed the need to strengthen all levels of education. Will the noble Baroness say whether the conclusion of the Africa Commission on that issue has altered DfID's direction on education and, if so, how?
	This is a key year for the UK. It has a lead role with great responsibilities. We all agree that education—primary, secondary, tertiary and vocational, for girls as well as boys—is the key to greater prosperity in developing countries. We hear what a difference it makes. We need to know not only what the UK is doing, but how far it is persuading its G8 partners and its EU colleagues in delivering their commitments.

Baroness Rawlings: My Lords, I, too, thank the noble Lord, Lord Thomson, on initiating this debate. It has been fascinating, with an outstanding maiden speech by the noble Lord, Lord Stevens. Few of us would have forecast that, with his distinguished policing career, he would have chosen this debate for his maiden speech. But that in itself, as well as the speech, showed the breadth and depth of the wisdom he brings to your Lordships' House. We look forward to his future contributions.
	The noble Lord, Lord Thomson, presents us with an invaluable opportunity to examine the important contribution that DfID can make in the field of improving global education. As is so often the case in your Lordships' House, we have heard many well informed and enlightened contributions. It is, indeed, a timely debate for two reasons. The year 2005 is important for the UK. As noble Lords know, we chair the G8 and hold the presidency of the now expanded European Union. Furthermore, we are now only a decade away from 2015—the deadline for achieving the millennium development goals.
	In April 2004, the Secretary of State for International Development, quite rightly, stated that:
	"if we are to enable poor people and poor nations to gain a strong voice, economic independence and self-reliance for the future, we have to ensure that their basic needs are met and that the building blocks are in place for a strong civil society and effective and transparent government".
	That is a sentiment with which, I am sure, noble Lords on all sides of the House would agree. We on this side have consistently argued the importance of trade and not relying solely on aid as one of the key building blocks to help the poorest countries.
	Education is a vital building block. The World Education Forum in Dakar in 2000 committed to achieving six goals specifically relating to education. They included, among other things, achievement of universal primary education, the elimination of gender disparity in education and halving adult illiteracy levels by 2015.
	Here, I want to refer to the pioneering work done by Professors Cohen and Bloom on the costs and benefits of providing all the world's children with high-quality primary and secondary education. That was undertaken through a project called Universal Basic Secondary Education, supported by the American Academy of Arts & Sciences. I draw your Lordships' attention to an excellent article summarising the project: it can be found in the IMF's Finance and Development quarterly of June 2005.
	The most recent statistics show that we are far away from where we want to be. Unfortunately, more than 100 million children worldwide still do not attend primary school, and it is often girls who are disproportionately affected, as we heard from the noble Baroness, Lady Northover.
	We welcome the progress that has clearly been made in providing improved access both to healthcare and education. That is vital not just in providing a future workforce equipped with basic skills but also in preventing the continued spread of disease that cripples the development of so many African countries.
	In Africa, we welcome the particular progress that has been made in providing education for young people, and we have recently seen a doubling in the number of children enrolling in primary education in countries such as Uganda and Rwanda, as we heard from the noble Baroness, Lady Tonge. The ongoing scourge of HIV/AIDS continues to blight the continent, spreading through a mix of cultural traditions and a lack of education. However, in countries where health education has been pushed to the fore, we have seen significant reductions in new cases of the virus. That has particularly been the case in Uganda.
	In Asia, we are delighted that in Afghanistan economic growth is up again and that more than 4 million children have returned to school. In the previous year, there was a doubling in support to the Yemen with, in particular, an increased focus on providing education for girls.
	Noble Lords on all sides acknowledge that conflict is the single biggest factor in preventing development. Education is surely one of the key tools in reducing conflict. The establishment of good governance and civil society is underpinned by an educated population who have the skills to provide for themselves, who understand and participate in democratic government, and who are able to contribute to their own future. Of course, the role of this House is to ensure that the money that DfID is targeting on education projects is really going to the areas where it is most needed. Noble Lords may recall that in June last year on the publication of the DfID annual report, I asked the Minister to enlighten the House on Her Majesty's Government's decision to participate in a $100 million loan to provide schooling for 2.4 million children in China. Only last week, we heard reports that India and China are producing record numbers of university graduates, far outstripping the numbers that we are producing at home. Perhaps the Minister could update the House on the rationale behind a loan to support education in one of the fastest-growing economies in the world.
	Given the example that I have outlined, can the Minister also update the House on the Government's progress in their commitment to spend 90 per cent of this year's aid budget in the world's poorest countries? As we have heard from all noble Lords, many of these countries are in need of our support in providing opportunities for trade, development aid and access to education—one of the most basic of human rights and a building block for development still enjoyed by far too few people.

Baroness Royall of Blaisdon: My Lords, I am grateful to the noble Lord, Lord Thomson of Monifieth, for having secured the opportunity to debate this crucial issue. I have learned much. But, much more importantly, it is absolutely right and proper that we draw attention to the vital role of education and lifting individuals, families and nations out of poverty. It was an honour to be present for the maiden speech of the noble Lord, Lord Stevens. I look forward to many more speeches from him in the coming months and years.
	Education is a well established priority for the Government's aid programme. The Government targets 25 low-income countries for their bilateral assistance and supports international initiatives which are designed to help to achieve the education millennium development goals and the education for all goals. I endorse the statement of the noble Lord, Lord Stevens, that education is a basic human right. Not only is it currently denied to more than 100-million school-age children, as noble Lords have pointed out, nearly 60 million of whom are girls, but it has also been denied to 800 million adults who are unable to read or write. Only yesterday the UN Population Fund report suggested that the war on poverty cannot be won unless much greater efforts are made to give women equality. That is clearly recognised by DfID's strategy, Girls education: towards a better future for all, which was launched in January.
	Education is crucial to any country's strategy to eliminate poverty. Skilled workers are needed for economic development and for improving public services. An extra year of schooling for girls can boost their eventual earnings by 10 to 20 per cent. Education is vital for healthier, safer and more equitable societies. In sub-Saharan Africa the children of mothers with five years of primary education are 40 per cent more likely to live beyond the age of five than those without.
	Education is essential to limit the spread and the impact of HIV/AIDS. For example, in Swaziland, two-thirds of teenage girls in school are free from HIV, while two-thirds of those out of school are HIV positive. That is why basic education is a core component of our aid programme, for which the primary goal is the elimination of poverty. Our approach is to ensure that education aid results in real changes to children's lives. In Kenya for example, the abolition of primary school fees resulted in the enrolment of more than one million additional children. DfID and other agencies are supporting the Kenyan government to sustain attendance and improve quality.
	I can assure noble Lords that we have not ignored secondary and tertiary education, which is essential. However, as in our own education system, we had to prioritise our policies at the beginning for our support of education in developing countries. DfID works with governments to develop education plans which provide for a balanced investment across all levels of the education system. Much of our funding is through direct budget report which will strengthen the education sector as a whole, including secondary and higher education.
	The Government of course recognise that the Chevening and other scholarships are of the greatest importance. I am pleased to tell the noble Baroness, Lady Hooper, that in 2003–04 there were 2,401 Chevening scholars.
	The noble Lord, Lord Thomson, was right to draw our attention to Africa and we learn from his great experience with the Commonwealth. We join him in wishing Malawi well with its innovative initiatives. Earlier this year, the Commission for Africa made a strong call for well-conceived, appropriately financed education strategies in the sub-continent. DfID is exploring ways of working with the African Union and NePAD to ensure that government education policies pay more attention to investing in science and technology. This will have implications for the revitalisation of higher education in Africa, including teacher training.
	Working with the Church in Africa is, of course, extremely important. The noble Lord, Lord Newby, was right to point out that teachers are a vital tool for achieving the education MDGs.
	On the Commonwealth, I am glad to say that we still have a very strong system of Commonwealth scholarships and fellowships planned and a Commonwealth student scholarship scheme. We also support The Commonwealth of Learning.
	The noble Lord, Lord Newby, asked about the CFA. DfID and other government departments are committed to the recommendations on strengthening the capacity of African governments and organisations to lead their own development. On education, we continue to support African governments to develop their plans for education at all levels, including higher education.
	These priorities inform our policy dialogue with partner governments to support the development of sound education plans. In many countries, particularly in Africa, this requires assistance for recurrent costs, especially for teachers. This is why we provide medium to long-term financial support directly to government budgets.
	Noble Lords have mentioned many new initiatives, and DfID will certainly look closely at, for example, the extraordinary CIDA initiative mentioned by the noble Lord, Lord Joffe. In Tanzania, the abolition of school fees resulted in a dramatic increase in primary school enrolment, from 50 per cent of seven to 13 year-olds in 2000 to 95 per cent in 2005. I am glad to say that DfID is committing £85 million for Tanzania's strategy to eliminate poverty, which includes education.
	Work in countries experiencing conflict and emergency is of increasing importance. In Afghanistan we contributed to the Reconstruction Trust Fund, which has helped 4.2 million children back to school. In Pakistan, we are waiting for an assessment of the situation from the UN, and when we receive that we will act upon it in the way suggested by the noble Baroness, Lady Hooper.
	As the noble Lord, Lord Judd, noted, we play a lead role in the Fast Track Initiative, an international partnership designed to mobilise additional resources for countries to accelerate education progress and to improve donor co-ordination. DfID has committed £50 million over three years to the FTI. We are also working innovatively with other bilateral agencies, and are developing a delegated co-operation agreement with France that will provide £10 million for the Niger Government's basic education programme, particularly for girls.
	We encourage the involvement of civil society in developing national education policies, and, like noble Lords, the Government warmly welcome the partnerships that have been formed between schools, universities, faith-based organisations and communities. This is essential for our own social cohesion, as well as for enabling greater global understanding. Joined-up government is, of course, essential. The right reverend Prelate is right when he says that we must all clamber out of our silos, and I am glad to say that all departments are striving to do so.
	I note the point made strongly by my noble friend Lord Hunt about the need for wider education when people come to work or study in this country. I am assured that the British Council is doing this, but I feel strongly about this issue, and shall pursue it further.
	In the 25 countries under DfID's public service agreement, progress towards the education MDGs is monitored regularly. Evidence from 16 African PSA countries shows good progress, with average primary school net enrolment ratios rising from 67 to 77 per cent since 1998. Progress in Asian PSA countries is mixed, but some countries are now at, or close to, universal primary education. Net enrolment is now above 90 per cent in China, Vietnam, Cambodia and Indonesia, and gender parity is already achieved at the primary level in Bangladesh, China and Indonesia. This demonstrates that policy reform, supported by external assistance, can result in fast and significant improvements, leading to real returns from education in the longer term.
	World-wide, however, as many as 70 countries may not achieve the 2015 target for universal primary education, based on the current rates of progress, and I share the anxiety expressed by the noble Baroness, Lady Northover. More than 75 countries are at risk of missing the target for gender parity in education even by 2015. The experience of those countries that are making significant progress, however, is a clear signal that change is possible, even in the most difficult circumstances. As the noble Baroness, Lady Tonge, said, there has been much success, aided by the excellent work of DfID, but there is much more to be done. I assure noble Lords that we will do much more.
	Between 1997 and 2002 the UK Government committed over £700 million to basic education in developing countries. Our support for education will rise to £1.4 billion over the next three years, a strong indication of our enhanced commitment to provide long-term assistance. Given the pledges made on aid and debt relief by the international community in 2005, the UK will, and must, press hard for other donors to meet their commitments to education.
	The noble Lord, Lord Thomson, mentioned ICT and the fact that we provide some assistance that is not relevant. We support ICT in schools where it is relevant and in the right context. We have, through our initiative Infundo, worked with governments to develop lasting, effective, sustainable and appropriate efforts to ensure access for all. The noble Lord also asked about visa restrictions preventing students coming to the UK to study. The Government are working to ensure that all students from developing countries can benefit from academic exchange with the UK. DfID is working with the DfES and the Home Office to look at that issue. We sponsor a number of scholarship programmes that encourage exchanges to develop the capacity of individuals from developing countries to contribute to their own country's development.
	The noble Baroness, Lady Hooper, asked about our contribution to the European Union. As she will know, the EU is the second largest multilateral provider of aid to education after the World Bank. In 2001–02, it totalled £250 million. That is increasing, and our funds to the EU support education programmes in some of the poorest countries in Africa and south Asia. I will obtain fuller figures if the noble Baroness desires.
	We must ensure that the commitment to increased aid and debt relief, announced at the G8 this year, benefits education. This Government are strongly committed to working with partner governments and the international community to accelerate progress in achieving education for all.

House adjourned at five minutes before two o'clock.